Early Wednesday, the financial-technology (fintech) sector experienced a downturn as a major European payments company delivered a worrying announcement. Worldline (WLN.France), a leading payments company based in France, revised its full-year guidance due to an economic slowdown affecting sales and profitability in key markets.
According to Worldline, consumers are reallocating their spending towards essential items like housing and food rather than discretionary expenses such as entertainment or luxury goods. This shift in consumer behavior has impacted the company’s performance.
As a result of Worldline’s announcement, its shares plummeted by 58% in Paris, creating a ripple effect throughout the payments and fintech industry. Block (SQ), another payments company, saw a decline of 3.9% in its shares, while PayPal Holdings (PYPL) experienced a drop of 2.6%.
Worldline primarily focuses on business operations in Europe and highlighted Germany as a country facing a deteriorating macroeconomic environment. Originally forecasting growth of 8% to 10% for the year, Worldline now expects organic sales to grow by only 6% to 7% in light of the current circumstances.
Last year, PayPal generated approximately 18% of its revenue from Europe, while Europe accounted for only 3.3% of Block’s revenue, as reported by FactSet.
The impact of this warning extended beyond Worldline, affecting other European payments companies. Adyen (ADYEN.Netherlands), a Dutch company, experienced a decline of 6.4% in Amsterdam, while Italy’s Nexi (NEXI.Italy) dropped by 15%.